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SBJ/October 29 - November 4, 2001/Marketingsponsorship
Marketing firms eyeing cuts
Published October 29, 2001
Sports marketing companies across the United States are looking at ways to cut costs, and in some cases have already started cutting, as corporate clients pull back on sporting events and sponsorships.
Industry giant IMG has issued a companywide directive to top executives to reduce expenses — including layoffs and office closures by the end of the year. But IMG is not alone.
Mark Bingham, president of marketing for Octagon in North America, said his company has already instituted some cost reduction measures, but declined to be more specific.
Many of Octagon's corporate consulting clients have reduced sports marketing budgets, and the company is working to be more creative with clients in trying to do more with less money, he said. Octagon also represents some sports properties and is having a tough time closing sponsorship deals at the same rate as before Sept. 11, he said. Some are "waiting for the dust to settle" before making new commitments on sports marketing.
But, he said, things aren't all bad. "We have picked up some business, consulting business, not only in the last month, but in the last couple of months," Bingham said. "People are out there doing business."
Kevin Murphy, CEO of Woolf Associates, said he has not yet had to cut jobs, but he has been clamping down on travel expenses and has not replaced a few nonessential employees who left the company recently.
"If the economy continues in its doldrums and has a similar impact on sports sponsorship, sports events and sports marketing, we absolutely, positively will have to look at cost-cutting," Murphy said.
Woolf is involved in athlete representation, corporate consulting, event management and sponsorship sales.
"Half of our business comes from player representation, and that buffers us somewhat," Murphy said. Athletes "have contracts and they get paid by the teams and we get our fees."
But event management, sponsorship sales and corporate consulting are businesses "under pressure," he said.
One company that says it isn't feeling the pinch of the downturn is Clear Channel's SFX Sports.
"We are not experiencing any of the downward performance issues of our competitors," said Howard Schacter, company spokesman.
Schacter said the company did reduce its staff by seven employees, five of whom were employed with SFX-owned Atlanta Tennis Challenge, an event that Schacter said has an uncertain future. But he said, "The company does not characterize those as layoffs but normal business attrition."
Bob Kain, president and COO of IMG, Americas, noted that the sports business is not recession-proof.
"We are not a hospital," Kain said. "You don't have to sponsor a golf tournament. You don't have to buy a 30-second spot on television, and you don't have to sponsor Tiger Woods."